Tag European Union

As relations among Russia, the United States and the European Union deteriorate over the Ukraine crisis, there may be one unexpected winner: Brazil.

On Wednesday, Russian President Vladimir Putin signed a decree banning a list of agricultural products from the United States, the European Union, Canada, Australia and Norway in response to sanctions levied by the West. No sooner had Russia issued the ban than Brazilian producers were lining up to fill the gap.

“Brazil will substantially increase its meat and dairy exports,” Brazilian Agriculture Minister Neri Geller said in a statement.

Like this:

Eleven Latin American countries refused to back an IMF move this week to keep bankrolling Greece, citing risks of non-repayment, and the Fund itself said Athens might need faster debt relief from Europe.

The abstention by Latin American states from the IMF decision was revealed by their Brazilian representative in an unusual public statement on Wednesday, highlighting growing frustration in emerging nations with Fund policy to rescue debt-laden Europeans.

“Recent developments in Greece confirm some of our worst fears,” said Paulo Nogueira Batista, Brazil’s executive director at the IMF, who also represents 10 small nations in Central and South America and the Caribbean.

Like this:

Brazilian President Dilma Rousseff used a speech in recession-hit Spain to criticize austerity as a means of tackling economic crises.

“Policies that only stress austerity are showing their limitations,” Rousseff told an Ibero-American leaders summit today in the Andalusian city of Cadiz, Spain. “Exaggerated and simultaneous fiscal consolidation in every country is not the best response to the global crisis and could make it worse, leading to worse recession.”

While austerity measures may prevent the possibility of a financial collapse, they don’t necessarily help to convince markets or voters, Rousseff said. She spoke as European Commission President Jose Manuel Barroso told reporters in Cadiz that some European countries were facing a “social emergency” and the region’s priority should be to focus on growth.

Share this:

Like this:

In August 2011, as the European debt crisis raised fears of another international financial panic, Brazilian officials were bragging about their country’s impressive economic strength and record-low unemployment rate. “This is the second time that a crisis affects the world,” said President Dilma Rousseff, “and it is the second time that Brazil doesn’t shake.” The perception of Brazil as a booming economy that was insulated from the global turmoil had prompted an influx of foreign businessmen hoping to get rich (or richer). “If the rest of the world is cratering,” a Rio-based American banker told the New York Times, “this is a good place to be.”

In August 2012, amid a slowdown in China and other developing countries, Brazil is teetering on the brink of recession, largely because of an overvalued currency and sluggish exports. Its economy barely grew at all (0.2 percent) in the first quarter of this year, and its persistent weaknesses have suddenly been magnified. Even the Brazilian services sector, which had been buoying the economy, is now slumping: Its activity index (as measured by the financial giant HSBC) hit a three-year low in July. As for Brazilian industrial production (approximately one-third of the national economy), it has “failed to respond to government stimulus measures and a series of aggressive interest rate cuts,” notes the Wall Street Journal. Writing in the Miami Herald last week, Latin America expert Susan Kaufman Purcell declared that “Brazil’s economic future does not look nearly as bright as its recent past.” Indeed, while unemployment remains relatively low (for now), Brazil is no longer seen as an unstoppable economic powerhouse.

Like this:

The Brazilian real traded stronger at the open Monday as a European Union deal to bail out Spain’s troubled banking sector boosted morale, although gains may be short-lived ahead of next weekend’s elections in debt-saddled Greece.

Brazil’s real joined other global currencies, especially the euro, in gaining ground against the U.S. dollar as the deal with Spain boosted investor sentiment. The Brazilian real opened at BRL2.0197 to the dollar, according to Tullett Prebon via FactSet. That was stronger from Friday’s close at BRL2.0248.

Global markets cheered the weekend deal to recapitalize Spain’s banking sector, which has been weighed down by bad loans doled out during the country’s real-estate boom. The European Union will loan Spain up to $125 billion, with the final tally set to be disclosed by independent auditors later this month. The deal eliminates, for the moment, a key pressure point in the ongoing European financial crisis.

Share this:

Like this:

Guido Mantega, Brazil’s finance minister, had some words of comfort on Tuesday for eurozone policy makers wondering how to get themselves out of their present mess.

“We’re going to meet next week in Washington and we’re going to talk about what to do to help the European Union get out of this situation,” he told reporters, referring to a meeting to be held on September 22 between the finance ministers and central bank governors of the Bric nations – Brazil, Russia, India China, plus South Africa.

His comments followed a story in Valor Econômico, Brazil’s leading business daily newspaper, about a proposed rescue plan. The story is rather more cautious than Mantega’s comments imply. But it does suggest the Brics may grab the occasion of the eurozone liquidity crisis to reassert their status on the shifting world stage.